Correlation Between Clas Ohlson and Bufab Holding
Can any of the company-specific risk be diversified away by investing in both Clas Ohlson and Bufab Holding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Clas Ohlson and Bufab Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clas Ohlson AB and Bufab Holding AB, you can compare the effects of market volatilities on Clas Ohlson and Bufab Holding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Clas Ohlson with a short position of Bufab Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clas Ohlson and Bufab Holding.
Diversification Opportunities for Clas Ohlson and Bufab Holding
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Clas and Bufab is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Clas Ohlson AB and Bufab Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bufab Holding AB and Clas Ohlson is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Clas Ohlson AB are associated (or correlated) with Bufab Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bufab Holding AB has no effect on the direction of Clas Ohlson i.e., Clas Ohlson and Bufab Holding go up and down completely randomly.
Pair Corralation between Clas Ohlson and Bufab Holding
Assuming the 90 days trading horizon Clas Ohlson AB is expected to generate 1.32 times more return on investment than Bufab Holding. However, Clas Ohlson is 1.32 times more volatile than Bufab Holding AB. It trades about 0.34 of its potential returns per unit of risk. Bufab Holding AB is currently generating about 0.21 per unit of risk. If you would invest 20,670 in Clas Ohlson AB on November 3, 2024 and sell it today you would earn a total of 2,930 from holding Clas Ohlson AB or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clas Ohlson AB vs. Bufab Holding AB
Performance |
| Timeline |
| Clas Ohlson AB |
| Bufab Holding AB |
Clas Ohlson and Bufab Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clas Ohlson and Bufab Holding
The main advantage of trading using opposite Clas Ohlson and Bufab Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clas Ohlson position performs unexpectedly, Bufab Holding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bufab Holding will offset losses from the drop in Bufab Holding's long position.| Clas Ohlson vs. Tele2 AB | Clas Ohlson vs. Axfood AB | Clas Ohlson vs. Telia Company AB | Clas Ohlson vs. Byggmax Group AB |
| Bufab Holding vs. Addtech AB | Bufab Holding vs. Indutrade AB | Bufab Holding vs. Troax Group AB | Bufab Holding vs. Beijer Ref AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |